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Poverty Reduction Isabel Ortiz Poverty Trends and Measurements More than 2.8 billion people, or around half the world's population, live below the...

In one or two paragraphs explain how this article relates to: Distinction between income and wealth, Inflation, and Unemployment. 

Poverty Reduction Isabel Ortiz Poverty Trends and Measurements More than 2.8 billion people, or around half the world's population, live below the international poverty line of US$2 a day. Of those, 1.2 billion people live in extreme poverty, surviving on less than $1 a day. Most of the poor are in Asia and Africa. The incidence of poverty is larger in women than men and higher in rural areas than in urban areas. Vulnerable groups such as the elderly, ethnic minorities, refugees or persons with disabilities are much more affected by poverty. Since 1990, the incidence of poverty has decreased, and the proportion of people living below the two dollar-a-day poverty line declined from 60% to 53% of the total world population. However, in absolute terms, poverty is not decreasing. Population growth remains high in developing countries, and many are born in poverty and destitution. According to World Bank data, the number of poor people has actually increased since the late 1980s. In August 2008, the Bank revised its extreme poverty figure to $1.25 a day. In doing so it found that 1.4 billion people in the developing world (one in four) were living on less than that amount in 2005. It said the new numbers showed that poverty has been more widespread across the developing world over the past 25 years than previously estimated. The definition and measurement of poverty is a highly political issue. Countries tend to hide the existence of large pockets of poverty as it makes them look underdeveloped and evidences public policy failures. Currently, different countries use different methodologies and are hard to compare – often they are based on the per capita expenditure necessary to attain 2,000-2,500 calories per day, plus a small allowance for non-food consumption. However, these measures do not adequately reflect other expenses necessary to cover basic needs – clothing, drinking water, housing, access to basic education and health, among others. This is the reason that United Nations institutions started using the one and two-dollar-a-day poverty lines; but these also have obvious flaws. If measurements based on a real minimum consumption basket were used, the number of people living in poverty would soar. There are many more poor people than appear registered in official statistics. Many argue that poverty is not only income poverty. Poverty also has non-economic dimensions, like discrimination, exploitation, or fear. Other aspects should be considered, such as lack of control of resources, vulnerability to shocks, helplessness to violence and corruption, lack of voice in decision-making, powerlessness and social exclusion. As we expand the definition of poverty, the numbers of people affected by it increase. Poverty should be distinguished from inequality. Inequality shows the distribution of income, consumption and other welfare indicators in society; in 2000, the richest 1 per cent of adults
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owned 40% of global assets, and the richest 10% of adults accounted for 85% of total world assets; in contrast, the bottom half of the world adult population owned barely 1% of global wealth. The comparison between what the rich and the poor possess raises serious questions on the adequacy of current development models (development for whom?) and generates feelings of injustice and political claims. This is why national estimates of inequality are even less reliable than those on poverty; income disparities are not at the core of national statistical data (for instance, Egypt and Indonesia are "officially" more equal societies than Australia or France). For these reasons, United Nations institutions have been working towards better monitoring of poverty and distribution data. Recent findings show that inequality has been growing in the late decades of the 20th century. Redressing global asymmetries is an urgent priority. Poverty Reduction in Historical Perspective Poverty is not a new phenomenon. Many descriptions of Europe in the 19th century describe living and working conditions similar to those seen today in developing countries. Charles Dickens’ stories of children’s misfortunes are analogous to the lives of many working children in contemporary Africa, Asia and Latin America. Friedrich Engels description of Manchester's river Irk industrial ghetto is similar to today’s shanty-town scenes from Smoky Mountain in Manila or Nova Iguazu in Rio de Janeiro. Let's take the example of the US in the 1930s. After the 1929 crash and the Great Depression, poverty was widespread, people migrated with little more to sell than their own labor, mafias were powerful and citizens powerless – again, a similar situation to today's developing countries. After years of hardship, unemployment and crisis, the Roosevelt Administration embarked on the New Deal to revitalize the economy and support US citizens. It worked. The US entered a period of prosperity. At the end of World War II, politicians from the advanced economies were determined that unemployment and economic crisis, which had provoked political crisis and resulted in Communism and Fascism, should never happen again. They accepted that full employment and macroeconomic stability should be the primary national policy objective, and the government got more involved in education, medical care, social and housing assistance, minimum retirement levels, employment policies, enforcement of labor laws and regulations. These programs were not new; they had been an essential part in the modernization programs of these wealthier societies at the early stages of their development. It worked again. Postwar policies allowed high productivity gains in the workforce, expanded domestic demand, and increased economic growth. The populations of Europe, Japan, North America, Australia and New Zealand experienced a prosperity unseen in history. The lesson is that poverty can be reduced if governments are committed – and it can be reduced fast. However, Third World governments are rarely fully committed – poverty reduction is generally only one of many developmental objectives. A significant amount of developing countries are starved of capital, pressured by external debt, and have limited access to developed countries markets to export their products. Social policies, such as health, employment or pensions, have not been a priority; they have been largely neglected, or at best addressed with inadequate resources. Standard policy prescriptions provided by major development agencies (―the Washington Consensus‖) are often inadequate and exacerbated poverty in the past. In many
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